A new study from Moody's Analytics estimates that the military conflict in Iran, initiated by former US President Donald Trump, has cost American households approximately $100 billion overall, translating to roughly $750 per household since February. The analysis attributes the financial burden primarily to a sharp increase in energy costs following the closure of the Strait of Hormuz, which has led to a 35 percent surge in oil prices.
According to AAA data, the national average price for regular gasoline in the US stands at $4.29 per gallon, with prices previously climbing above $4.50 and still exceeding $5 in six states due to disrupted shipping lanes. While the White House has downplayed the economic impact, public polling suggests significant pressure on domestic budgets. A May survey by Public First for Politico found that 53 percent of Americans say the cost of living is the worst they can remember, up from 46 percent in November.
Mark Zandi, chief economist at Moody's Analytics, described the conflict as a “big economic blow” for Americans. He noted that while domestic tax cuts initially offset higher costs, that is no longer the case. “As of May 16, the bigger tax refunds Americans have received this year no longer cover the higher costs of gasoline, diesel, and jet fuel caused by the war,” Zandi wrote. “The financial pressure is thus mounting quickly, particularly on already hard-pressed middle and lower-income households.”
Data from the Bureau of Economic Analysis shows the personal savings rate fell to 2.6 percent in April, down from 5.8 percent a year earlier, indicating households are setting aside less money as daily expenses rise. Economists warn that if energy prices fail to stabilise, low savings rates could force families to cut spending, weighing on economic growth. Zandi added, “With the saving rate about as low as it ever goes, unless the war ends soon and energy prices come down, they will have little choice but to rein in their spending, weighing further on the already sagging economy.”
